Banana Prices set to SOAR! this should beat earnings big time!
i think CQB is going to announce impressive guidance which will bring in a new level of interest. Banana prices are set to soar since the crop in Australia was destroyed by the recent Typhoon and Aussies are one of the largest worldwide consumers of bananas. DO YOUR HOMEWORK HERE FOLKS!!! THIS COULD BE A BIG WINNER COME MARCH 2nd earnings!!
Fresh Del Monte reported that worldwide banana prices were down 2% in the Q. Appears that CQB stock is reacting to that and the poor earnings at FDM. However, when you read the FDM press release (below), they say banana prices in Europe were improving. It is my impression that CQB does 50%+ of its banana sales in Europe and it mostly a spot price business which is good when prices are rising. Perhaps this selloff is unwarranted?
Thoughts welcome. PS Note - they dont mention Australia at all per playmoney's comment.
Net sales increased 3% to $395.3 million during the quarter, compared with $385.5 million in the prior year period. The increase in net sales was primarily driven by higher sales volume in the Company’s Middle East, North America and Asia regions. Volume was up 4%. Worldwide pricing decreased $0.21, or 2%, to $12.77 per unit. The decrease was due to lower selling prices in the Company’s Middle East and Asia regions, partially offset by improved selling prices in Europe. Gross profit was a loss of $10.7 million in the quarter, compared with gross profit of $3.7 million in the prior year quarter. The decrease was primarily due to higher fruit costs, lower selling prices and unfavorable exchange rates in producing countries. Unit costs increased 2% as compared to the prior year quarter.
It's hard to think that CQB had a great quarter, given what FDP reported. But, it is possible that they meet estimates and leave guidance unadjusted.
Their ratio of sales by region are not the same as FDP's, and we know that FDP got stung in Asia and Middle East, not EU. So, I agree with your idea that CQB could shake out differently.
The more important differentiator here is that pineapple sales are a huge part of the FDP business, and they got hit with storm damage that wiped out crops and constricted supply. This has nothing to do with CQB, and it was the single greatest determinant in FDP's earnings miss.
On the other hand, CQB has the Fresh Express business, and that one is very hard to gauge, because we don't get outside reports about volumes and pricing between quarters.
Australia is mostly a non-event, as has been discussed here earlier.
I would be surprised if guidance were raised, regardless of results reported today. With oil prices over $100, all of the fruit shippers are facing higher expenses. CQB tends to hedge bunker fuel and surcharge when fuel prices spike. So, they may be covered, or even profit on the hedge. But, the situation is going to make everyone cautious.
Anyway, I do think that CQB is being punished a bit too much in advance. They took a bigger hit than FDP and haven't even reported. I guess some traders would rather exit now and assume the worst. I'm thinking it won't be as bad as they are fearing, but we'll know in a few hours.
The Australia information is old news...and most importantly the Australian government prohibits the import of bananas and therefore there is no benefit to be realized by industry players outside of Australia